Natural killer (NK) cells are a critical component of the innate immune system. However, their ontogenic origin has remained unclear. Here, we report that NK cell potential first arises from Hoxaneg/low Kit+CD41+CD16/32+ hematopoietic-stem-cell (HSC)-independent erythro-myeloid progenitors (EMPs) present in the murine yolk sac. EMP-derived NK cells and primary fetal NK cells, unlike their adult counterparts, exhibit robust degranulation in response to stimulation. Parallel studies using human pluripotent stem cells (hPSCs) revealed that HOXAneg/low CD34+ progenitors give rise to NK cells that, similar to murine EMP-derived NK cells, harbor a potent cytotoxic degranulation bias. In contrast, hPSC-derived HOXA+ CD34+ progenitors, as well as human cord blood CD34+ cells, give rise to NK cells that exhibit an attenuated degranulation response but robustly produce inflammatory cytokines. Collectively, our studies identify an extra-embryonic origin of potently cytotoxic NK cells, suggesting that ontogenic origin is a relevant factor in designing hPSC-derived adoptive immunotherapies. Display omitted •NK cell potential arises from erythro-myeloid progenitors (EMPs) in the yolk sac•EMP-derived NK cells, similar to fetal NK cells, have a potent degranulation response•hPSC differentiation yields 2 distinct CD34+ populations, each with NK cell potential•hPSC-derived EMP-like NK cells are more potently cytotoxic than adult CD16+ NK cells NK cell potential is thought to arise from lymphoid progenitors; however, in parallel studies of murine embryos and human pluripotent stem cells, Dege et al. demonstrate that NK cells with a potent cytotoxic degranulation response arise from erythro-myeloid progenitors.